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Lucas Wang Stop Loss Strategy Case Study Solution

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Lucas Wang Stop Loss Strategy is currently among the greatest food cycle worldwide. It was established by Kelloggs in 1866, a German Pharmacist who initially launched "FarineLactee"; a combination of flour and milk to feed infants and reduce mortality rate. At the exact same time, the Page brothers from Switzerland also found The Anglo-Swiss Condensed Milk Business. The two ended up being rivals initially but later combined in 1905, leading to the birth of Lucas Wang Stop Loss Strategy.
Business is now a transnational business. Unlike other multinational business, it has senior executives from various nations and tries to make decisions considering the whole world. Lucas Wang Stop Loss Strategy presently has more than 500 factories around the world and a network spread across 86 nations.

Purpose

The function of Business Corporation is to boost the quality of life of people by playing its part and providing healthy food. While making sure that the business is being successful in the long run, that's how it plays its part for a much better and healthy future

Vision

Lucas Wang Stop Loss Strategy's vision is to provide its consumers with food that is healthy, high in quality and safe to consume. Business imagines to develop a trained workforce which would help the company to grow
.

Mission

Lucas Wang Stop Loss Strategy's mission is that as presently, it is the leading business in the food market, it thinks in 'Excellent Food, Excellent Life". Its objective is to offer its customers with a variety of choices that are healthy and finest in taste also. It is concentrated on supplying the very best food to its consumers throughout the day and night.

Products.

Business has a wide variety of items that it provides to its clients. Its items consist of food for babies, cereals, dairy products, treats, chocolates, food for pet and bottled water. It has around four hundred and fifty (450) factories around the globe and around 328,000 workers. In 2011, Business was noted as the most gainful organization.

Goals and Objectives

• Bearing in mind the vision and objective of the corporation, the business has actually laid down its goals and objectives. These goals and goals are noted below.
• One objective of the company is to reach absolutely no landfill status. It is pursuing absolutely no waste, where no waste of the factory is landfilled. It encourages its staff members to take the most out of the by-products. (Business, aboutus, 2017).
• Another goal of Lucas Wang Stop Loss Strategy is to waste minimum food during production. Usually, the food produced is wasted even before it reaches the customers.
• Another thing that Business is dealing with is to enhance its packaging in such a way that it would help it to reduce those problems and would also guarantee the shipment of high quality of its products to its clients.
• Meet international standards of the environment.
• Construct a relationship based on trust with its consumers, service partners, staff members, and federal government.

Critical Issues

Recently, Business Company is focusing more towards the technique of NHW and investing more of its profits on the R&D innovation. The country is investing more on acquisitions and mergers to support its NHW strategy. Nevertheless, the target of the business is not accomplished as the sales were expected to grow higher at the rate of 10% annually and the operating margins to increase by 20%, given in Display H. There is a requirement to focus more on the sales then the development technology. Otherwise, it may lead to the decreased revenue rate. (Henderson, 2012).

Situational Analysis.

Analysis of Current Strategy, Vision and Goals

The present Business strategy is based on the idea of Nutritious, Health and Wellness (NHW). This technique deals with the concept to bringing change in the client preferences about food and making the food stuff healthier concerning about the health concerns.
The vision of this technique is based on the key approach i.e. 60/40+ which just implies that the products will have a score of 60% on the basis of taste and 40% is based on its dietary worth. The items will be made with additional nutritional value in contrast to all other products in market acquiring it a plus on its dietary material.
This technique was adopted to bring more yummy plus healthy foods and drinks in market than ever. In competitors with other companies, with an objective of maintaining its trust over clients as Business Company has actually gotten more trusted by clients.

Quantitative Analysis.

R&D Costs as a percentage of sales are declining with increasing real quantity of spending reveals that the sales are increasing at a greater rate than its R&D costs, and permit the business to more invest in R&D.
Net Earnings Margin is increasing while R&D as a percentage of sales is decreasing. This indication likewise reveals a green light to the R&D spending, mergers and acquisitions.
Financial obligation ratio of the company is increasing due to its costs on mergers, acquisitions and R&D development rather than payment of debts. This increasing financial obligation ratio present a risk of default of Business to its investors and might lead a decreasing share rates. In terms of increasing debt ratio, the firm should not spend much on R&D and needs to pay its existing debts to decrease the danger for investors.
The increasing danger of investors with increasing financial obligation ratio and decreasing share prices can be observed by substantial decline of EPS of Lucas Wang Stop Loss Strategy stocks.
The sales growth of company is likewise low as compare to its mergers and acquisitions due to slow understanding structure of consumers. This slow development likewise prevent company to additional spend on its mergers and acquisitions.( Business, Business Financial Reports, 2006-2010).
Keep in mind: All the above analysis is done on the basis of computations and Charts given up the Exhibitions D and E.

TWOS Analysis


2 analysis can be utilized to derive different methods based on the SWOT Analysis offered above. A brief summary of TWOS Analysis is given in Exhibit H.

Strategies to exploit Opportunities using Strengths

Business should introduce more ingenious items by large amount of R&D Costs and mergers and acquisitions. It could increase the marketplace share of Business and increase the revenue margins for the business. It might likewise supply Business a long term competitive advantage over its competitors.
The international expansion of Business need to be focused on market catching of developing countries by growth, drawing in more clients through client's loyalty. As establishing countries are more populated than developed countries, it might increase the customer circle of Business.

Strategies to Overcome Weaknesses to Exploit Opportunities

Swot AnalysisLucas Wang Stop Loss Strategy ought to do cautious acquisition and merger of organizations, as it might affect the consumer's and society's understandings about Business. It should get and merge with those business which have a market track record of healthy and healthy business. It would improve the perceptions of consumers about Business.
Business should not just invest its R&D on innovation, instead of it must likewise concentrate on the R&D costs over assessment of expense of various nutritious products. This would increase cost effectiveness of its items, which will result in increasing its sales, due to declining rates, and margins.

Strategies to use strengths to overcome threats

Business needs to transfer to not just establishing however likewise to developed nations. It must expands its geographical expansion. This broad geographical expansion towards developing and developed countries would reduce the threat of potential losses in times of instability in numerous nations. It ought to broaden its circle to various countries like Unilever which runs in about 170 plus countries.

Strategies to overcome weaknesses to avoid threats

It needs to obtain and combine with those countries having a goodwill of being a healthy company in the market. It would also enable the business to utilize its potential resources efficiently on its other operations rather than acquisitions of those organizations slowing the NHW technique growth.

Segmentation Analysis

Demographic Segmentation

The demographic segmentation of Business is based upon four aspects; age, gender, earnings and profession. For example, Business produces several products associated with babies i.e. Cerelac, Nido, and so on and associated to adults i.e. confectionary items. Lucas Wang Stop Loss Strategy products are rather budget-friendly by practically all levels, however its major targeted clients, in regards to earnings level are middle and upper middle level customers.

Geographical Segmentation

Geographical segmentation of Business is made up of its existence in nearly 86 nations. Its geographical segmentation is based upon two main aspects i.e. average income level of the consumer in addition to the environment of the region. For example, Singapore Business Company's segmentation is done on the basis of the weather of the region i.e. hot, warm or cold.

Psychographic Segmentation

Psychographic segmentation of Business is based upon the personality and life style of the client. Business 3 in 1 Coffee target those consumers whose life style is quite hectic and do not have much time.

Behavioral Segmentation

Lucas Wang Stop Loss Strategy behavioral division is based upon the mindset knowledge and awareness of the client. For example its extremely nutritious products target those consumers who have a health mindful attitude towards their intakes.

Lucas Wang Stop Loss Strategy Alternatives

In order to sustain the brand in the market and keep the client undamaged with the brand, there are two choices:
Alternative: 1
The Business ought to spend more on acquisitions than on the R&D.
Pros:
1. Acquisitions would increase overall properties of the company, increasing the wealth of the business. Nevertheless, spending on R&D would be sunk expense.
2. The company can resell the acquired units in the market, if it stops working to implement its strategy. Amount invest on the R&D could not be restored, and it will be thought about entirely sunk expense, if it do not provide possible results.
3. Investing in R&D supply sluggish development in sales, as it takes very long time to present a product. Acquisitions provide quick results, as it offer the company currently developed product, which can be marketed soon after the acquisition.
Cons:
1. Acquisition of company's which do not fit with the business's values like Kraftz foods can lead the company to deal with misconception of consumers about Business core values of healthy and nutritious items.
2 Large spending on acquisitions than R&D would send out a signal of company's ineffectiveness of developing ingenious items, and would outcomes in consumer's frustration.
3. Large acquisitions than R&D would extend the product line of the business by the items which are currently present in the market, making business unable to introduce brand-new innovative products.
Alternative: 2.
The Company ought to spend more on its R&D rather than acquisitions.
Pros:
1. It would make it possible for the company to produce more ingenious items.
2. It would provide the business a strong competitive position in the market.
3. It would enable the company to increase its targeted clients by presenting those products which can be provided to an entirely new market sector.
4. Ingenious items will provide long term benefits and high market share in long term.
Cons:
1. It would reduce the profit margins of the business.
2. In case of failure, the whole spending on R&D would be considered as sunk cost, and would affect the company at big. The danger is not when it comes to acquisitions.
3. It would not increase the wealth of business, which might provide an unfavorable signal to the financiers, and might result I decreasing stock prices.
Alternative 3:
Continue its acquisitions and mergers with considerable spending on in R&D Program.
Vrio AnalysisPros:
1. It would allow the business to introduce new ingenious items with less danger of converting the spending on R&D into sunk expense.
2. It would supply a favorable signal to the investors, as the total properties of the business would increase with its considerable R&D costs.
3. It would not affect the revenue margins of the business at a big rate as compare to alternative 2.
4. It would offer the company a strong long term market position in terms of the company's general wealth along with in regards to innovative products.
Cons:
1. Risk of conversion of R&D spending into sunk expense, greater than alternative 1 lesser than alternative 2.
2. Threat of misunderstanding about the acquisitions, greater than alternative 2 and lower than option 1.
3. Introduction of less variety of innovative items than alternative 2 and high variety of innovative products than alternative 1.

Lucas Wang Stop Loss Strategy Conclusion

RecommendationsBusiness has actually remained the top market gamer for more than a years. It has actually institutionalized its techniques and culture to align itself with the market modifications and consumer habits, which has actually ultimately enabled it to sustain its market share. Business has actually established substantial market share and brand identity in the urban markets, it is advised that the business ought to focus on the rural areas in terms of establishing brand loyalty, awareness, and equity, such can be done by creating a specific brand name allowance method through trade marketing strategies, that draw clear difference between Lucas Wang Stop Loss Strategy items and other competitor products. Lucas Wang Stop Loss Strategy should utilize its brand name image of safe and healthy food in catering the rural markets and likewise to upscale the offerings in other categories such as nutrition. This will enable the company to establish brand name equity for newly presented and already produced products on a higher platform, making the reliable use of resources and brand name image in the market.

Lucas Wang Stop Loss Strategy Exhibits

PESTEL Analysis
P
Political
E
Economic
S
Social
T
Technology
L
Legal
E
Environment
Governmental support

Transforming standards of worldwide food.
Enhanced market share.
Altering perception towards healthier products
Improvements in R&D as well as QA departments.

Introduction of E-marketing.
No such influence as it is good.
Problems over recycling.

Use resources.

Competitor Analysis
Business Unilever PLC Kraft Foods Incorporation DANONE
Sales Growth Highest possible because 5000
Highest possible after Organisation with much less development than Company 1st Least expensive
R&D Spending Greatest because 2005 Greatest after Company 6th Cheapest
Net Profit Margin Highest possible since 2006 with rapid growth from 2003 to 2016 Due to sale of Alcon in 2014. Virtually equal to Kraft Foods Consolidation Practically equal to Unilever N/A
Competitive Advantage Food with Nourishment and health and wellness aspect Greatest number of brands with sustainable techniques Biggest confectionary and also refined foods brand in the world Largest dairy products and also bottled water brand name in the world
Segmentation Middle and also upper center level consumers worldwide Specific clients together with house team Any age and also Income Client Teams Center as well as top center level consumers worldwide
Number of Brands 9th 1st 9th 4th

Quantitative Analysis​
Analysis of Financial Statements (In Millions of CHF)
2006 2007 2008 2009 2010
Sales Revenue 86179 912264 455594 992943 358741
Net Profit Margin 2.98% 7.35% 94.54% 7.81% 49.17%
EPS (Earning Per Share) 18.63 7.72 2.54 2.14 23.23
Total Asset 171811 536125 393364 269971 97341
Total Debt 48143 73226 84153 34121 54582
Debt Ratio 24% 88% 85% 23% 95%
R&D Spending 8559 6781 3447 8599 2255
R&D Spending as % of Sales 1.15% 6.99% 3.81% 5.45% 6.17%

Lucas Wang Stop Loss Strategy Executive Summary Lucas Wang Stop Loss Strategy Swot Analysis Lucas Wang Stop Loss Strategy Vrio Analysis Lucas Wang Stop Loss Strategy Pestel Analysis
Lucas Wang Stop Loss Strategy Porters Analysis Lucas Wang Stop Loss Strategy Recommendations